At a time when the South African economy is facing several challenges, Experian KreditInform and Econometrix joined forces recently to bring to the market a unique product designed to help credit teams and general management better understand the macro and micro economic environment, and its impact on the South African credit granting industry.
The KreditMetrix Business Payment Index (BPI) provides information relating to business credit extension and payments, based on the primary research conducted by Experian KreditInform and coupled with analytical inputs from Econometrix.
The KreditMetrix BPI is a monthly index of how the players in the South African business community are settling their credit arrangements with suppliers. It condenses a wide range of existing data on business debt in South Africa into a single figure each month.
An increase in the BPI's value indicates that businesses are taking longer to settle their debts to other business suppliers. The higher the index value, the riskier the settlement environment is considered to be.
This figure will enable credit-granting businesses to fully understand how companies in South Africa are able to repay debt in times of economic stress. They are also able to follow trends relating to the debt burdens on business, to pre-empt repayment issues and to understand the potential for high increases in credit demand.
Greater levels of detail, such as splits by economic sector and by province, are also available on a subscription basis, including an age analysis of the outstanding debt of each sector, and of aggregated businesses in each province. The BPI data shows the index values based on debt owed by each sector, and is provided via a monthly, subscription-based e-publication.
By way of example, the BPI indicates that overall business debt settlements improved in December. This positive BPI outcome appears to be contradictory to anecdotal evidence of the deterioration in financial conditions of both individuals and companies, in the wake of high interest rates and excessive levels of debt. However, December's figures must be treated with a certain level of caution as there has been a slow survey response rate from creditors in December, which has resulted in an under-estimation of the BPI index. If one takes into consideration the under-reporting the index is estimated to be as high as 48, which is in line with November's index figure. The index is nevertheless still below the upper-threshold level, which confirms that South African credit providers are not facing the severe situation currently prevailing in some of the major economies of the world. There are, nonetheless, signs that consumers, while facing some stress, are adjusting their finances to deal with the tighter prevailing economic conditions.
The BPI detailed reports supporting the headline analysis are intended to inform credit and financial managers, as well as financial executives within the business community, who need to make decisions regarding rapidly changing balances between potential risks and potential rewards within the trade credit environment. Ultimately, better credit management information will lead to better credit management decisions.
Through the KreditMetrix BPI, the market-leading research and data strengths of KreditInform are combined with the analytical and interpretive strengths of Econometrix. Each of the companies contributes areas of skill to the specialised range of products.
“The KreditMetrix BPI will allow users to look beyond the existing analysis of credit worthiness of individual companies already provided by the service packages marketed by Experian KreditInform, to comprehensive analyses linked to economic events and indicators, of sectors and regions across the South African economy,” said Andrew Haynes, senior executive, Sales and Business Development, Experian KreditInform.
In Econometrix, Experian KreditInform has found a partner that can assist in unlocking the value of the extensive data they possess, predicting trends and helping to develop strategies to cope with the predicted changes.
Econometrix chief economist, Azar Jammine, said: “By measuring the effects of changes in the macro environment on the ability of businesses to perform optimally, it will allow more accurate forecasts and scenario planning to take place, and in turn ensure that better business decisions are made.”
The KreditMetrix BPI is a valuable resource on the desktops of financial executives and credit managers throughout the domestic economy.
If you would like to subscribe to KreditMetrix BPI, please call (011) 777-2700.
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